HYDERABAD: The Directorate of Enforcement (ED), Hyderabad Zonal Office, conducted searches on Thursday at 20 locations across India, including Hyderabad, Bengaluru, Chennai, Thanjavur, Surat, Raipur, Delhi NCR, and Andhra Pradesh in connection with the alleged AP liquor scam.
The searches were carried out at the premises of entities and individuals who allegedly facilitated payment of kickbacks through bogus or inflated transactions.
The ED began its investigation based on an FIR registered by the AP CID. The case was booked under various IPC sections for causing a loss of Rs 4,000 crore to the state exchequer. On February 5, the Andhra Pradesh government set up a Special Investigation Team (SIT) to probe the alleged scam.
The FIR alleged that, under the “new liquor policy” from October 2019 to March 2024, the accused engaged in “brand killing and new brand promotion.”
Popular brands such as McDowell’s, Royal Stag, and Imperial Blue, which refused to pay kickbacks, were sidelined. In their place, new and spurious brands were promoted in exchange for huge payments from distilleries and suppliers. The procurement system was also shifted from automated to manual. This gave scope for manipulation in Orders for Supply (OFS).
The SIT filed chargesheets and supplementary chargesheets. They alleged that the manual approval system was exploited to manipulate brand-wise indenting and supply volumes. Distilleries were forced to pay 15–20% of their invoice value as kickbacks.
Those who refused saw their brands suppressed or delisted. Shell distilleries were allegedly created to channel funds and secure inflated OFS volumes. Key officials facilitated brand approvals, manipulated norms, and suppressed dissenting suppliers. The chargesheets also alleged that kickbacks were generated through procurement manipulation, fake vendor payments, and shell companies. These funds were then used for elections, personal gain, and foreign transfers.
The ED probe revealed that some accused deliberately discouraged orders for established brands. They withheld legitimate payments to distilleries and pressured them to pay kickbacks in return for OFS approvals. The money trail investigation showed that part of the payments made by the Andhra Pradesh State Beverages Corporation Limited (APSBCL) to suppliers were diverted. Funds were transferred to various entities under the guise of goods or service supply. These transactions were bogus. The recipients were often non-existent firms, shell companies, or unrelated entities.
In some cases, related business entities were involved, but the transactions were inflated. Suppliers also transferred funds to jewellers, who converted them into gold or cash, which was then handed over to the accused as kickbacks. Bogus and inflated transactions were thus used to siphon off funds in the name of business and generate illicit money. The searches led to the recovery of incriminating material.